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Breaking Up Is Hard for Heinz and McDonald's to Do

Two brand titans part ways.

McDonald's(NYSE:MCD) and Heinz are breaking up in what became a public divorce last month. With a Burger KingWorldwide(UNKNOWN:BKW.DL) executive taking over as CEO of Heinz, it just didn't seem as if the relationship was going to work. It happens. Couples fall out of love, especially when a third party steps into the picture. But couldn't they stay together for the fries?

The irony behind this saucy and salacious breakup story is that McDonald's and Heinz had already drifted apart. McDonald's was serving Heinz only in Minneapolis and in Heinz's home turf of Pittsburgh.

Heinz -- now a Berkshire Hathaway(NYSE:BRK-A)(NYSE:BRK-B) property after being acquired in June -- did provide ketchup for Mickey D's overseas. That's where Berkshire Hathaway's new subsidiary will take a hit. As the world's largest restaurant chain, McDonald's is a great way for domestic brands to get noticed overseas. However, closer to home, this is pretty much a non-event.

You're going to have a friend in a few weeks complain that McDonald's shouldn't have switched ketchups. He'll say he can taste the difference. Unless you happen to be at a McDonald's in Pittsburgh or Minneapolis, it's OK to laugh at your friend. Nothing's changing.

Yes, McDonald's and Heinz went way back. We're talking about decades of the two companies growing in popularity together. However, it's hard to take issue with what McDonald's is doing here. Some have criticized the burger giant for acting petty and childish, but it's doing more than sending a message here.

New Heinz CEO Bernardo Hees isn't just the former CEO or Burger King Worldwide. Dumping Heinz solely because of that would've been spiteful. Hees is also a current board member. Having Heinz as a supplier could have exposed information about operations at McDonald's. What if McDonald's rolls out a product that it deems ketchup-worthy? What if boosting or decreasing ketchup orders can tip a Burger King board member as to sales trends at its larger rival? Even if Hees didn't have any official affiliations with Burger King, could McDonald's ever be sure that he wouldn't feed info to friends that he used to work with at its rival? McDonald's isn't simply being immature here. It's looking out for itself.

Both parties had plenty to gain here as two brands that can improve the prestige of the other. However, sometimes you just need to move on. Ketchup bottles may pour slowly at Heinz, but business moves at an entirely different speed.

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Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway, Burger King Worldwide, and McDonald's and owns shares of Berkshire Hathaway and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Author

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time with more than 20,000 bylines over those 22 years. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he splits his time living in Miami, Florida and Celebration, Florida.
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